Research examines the relationship between existing
production capacity, expected demand and investment in
It shows the growth rates of real investment
and the response of industrial companies when asked
whether their current production capacity was adequate
to fulfil existing and expected orders.
There is a strong
correlation between the two variables. At first glance
actual growth in investment often appears to precede
change in capacity utilisation. However, a two-sided
Granger causality test shows mutual dependence.